Oil auction in Iraq nets just one deal

BAGHDAD, July 1 (UPI) -- An all-day auction for eight oil development contracts in Iraq fell short of expectations with only one contract signed, the Iraqi Oil Ministry said.

A partnership between British Petroleum and the China National Petroleum Corp., secured a contract to develop Iraq's biggest oil field, Rumaila, which has an estimated 17 billion barrels of oil, The Washington Post reported Wednesday.

But the deal required the companies to accept a fee of $2 per barrel for every barrel they extract from the field between the current output of 1 million barrels a day to a benchmark of 2.85 million barrels a day.

BP spokesman Toby Odone said, "We're pleased with the process so far," although the companies' bid included a $3.99 per barrel fee to raise production to the higher mark.

The lack of signed deals is a setback for the country and for the United States, which is counting on oil development in Iraq to get the country back on its financial feet.

Iraq is producing about 2.4 million barrels a day, well below its capacity. The country sits on the largest oil reserves in the world outside of Saudi Arabia, the newspaper said.